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Public may end up paying for obsolete smart meters that save little, MPs warn Public may end up paying for obsolete smart meters that save little, MPs warn
(8 months later)
The government's £11bn roll-out of smart gas and electricity meters will cost every home about £215 over the next 15 years – yet households will save at most just 3% a year on the average energy bill by 2030, MPs have warned.The government's £11bn roll-out of smart gas and electricity meters will cost every home about £215 over the next 15 years – yet households will save at most just 3% a year on the average energy bill by 2030, MPs have warned.
Householders would save an average of just 2% on the typical annual bill of £1,328 until 2020, rising to £43 a year or 3% by 2030, the influential public accounts select committee said.Householders would save an average of just 2% on the typical annual bill of £1,328 until 2020, rising to £43 a year or 3% by 2030, the influential public accounts select committee said.
It said the Department of Energy & Climate Change had estimated the cost of the programme to install smart meters at £10.6bn, with households contributing through their energy bills.It said the Department of Energy & Climate Change had estimated the cost of the programme to install smart meters at £10.6bn, with households contributing through their energy bills.
The average impact on bills of the suppliers' net costs was expected to peak at £11 a year in 2017. The £215 represents the capital cost of installing the equipment, which will be borne by consumers between 2015 and 2030.The average impact on bills of the suppliers' net costs was expected to peak at £11 a year in 2017. The £215 represents the capital cost of installing the equipment, which will be borne by consumers between 2015 and 2030.
The new in-home displays are designed to reduce consumer bills, enable faster, easier switching of suppliers, and give households control at the touch of a button.The new in-home displays are designed to reduce consumer bills, enable faster, easier switching of suppliers, and give households control at the touch of a button.
The Commons committee said any savings depended on consumers becoming more "savvy" and using less energy. But it also warned that technology was advancing so rapidly that some aspects of the programme could be out of date by the time it is rolled out – so consumers could be receiving the information on their smartphones while still having to pay for a redundant meter.The Commons committee said any savings depended on consumers becoming more "savvy" and using less energy. But it also warned that technology was advancing so rapidly that some aspects of the programme could be out of date by the time it is rolled out – so consumers could be receiving the information on their smartphones while still having to pay for a redundant meter.
The mass roll-out of smart meters –already delayed – is due to start late next year and suppliers must commit to taking reasonable steps to have them in all UK households and small businesses by the end of 2020. The mass roll-out of smart meters –already delayed – is due to start late next year and suppliers must commit to taking reasonable steps to have them in all UK households and small businesses by the end of 2020.
It is expected that suppliers, rather than households, will gain most from the programme, as they will no longer have to absorb the costs of inspecting old analogue meters. Households, meanwhile, will see their annual bills rise further to pay for the installation.It is expected that suppliers, rather than households, will gain most from the programme, as they will no longer have to absorb the costs of inspecting old analogue meters. Households, meanwhile, will see their annual bills rise further to pay for the installation.
Margaret Hodge, the chair of the committee, said: "The costs of installing 53 million smart meters will be borne by consumers through their energy bills. It will cost around £215 per home or small business over the next 15 years to install the meters — an additional cost people can ill afford. Margaret Hodge, the chair of the committee, said: "The costs of installing 53 million smart meters will be borne by consumers through their energy bills. It will cost around £215 per home or small business over the next 15 years to install the meters — an additional cost people can ill afford.
"Despite consumers footing the bill, they can on average make a saving of only 2% on the average annual bill of £1,328 until 2020. Even this is conditional on consumers changing their behaviour and cutting their energy use. The Department of Energy & Climate Change is relying on the consumer becoming more 'savvy' in making decisions about using energy.""Despite consumers footing the bill, they can on average make a saving of only 2% on the average annual bill of £1,328 until 2020. Even this is conditional on consumers changing their behaviour and cutting their energy use. The Department of Energy & Climate Change is relying on the consumer becoming more 'savvy' in making decisions about using energy."
She added: "The department is depending heavily on assumed competition in the energy industry to control costs and deliver benefits. Relying on market forces to keep costs down may not be enough on its own to protect consumers. She added: "The department is depending heavily on assumed competition in the energy industry to control costs and deliver benefits. Relying on market forces to keep costs down may not be enough on its own to protect consumers.
"This is something energy companies don't have a great track record on. Ofgem's referral of the energy market to the Competition and Markets Authority reflected serious concerns about the lack of real competition in the industry.""This is something energy companies don't have a great track record on. Ofgem's referral of the energy market to the Competition and Markets Authority reflected serious concerns about the lack of real competition in the industry."
The consumer group Which? said the government must commit to keeping the £11bn cost of the programme under control. Richard Lloyd, executive director of Which?, said: "Energy prices are consistently one of the top worries for consumers so the government must commit to keeping the £11bn cost of rolling out smart meters under control. As consumers will ultimately foot the bill for smart meters, the programme must be done at the lowest possible cost and ensuring that consumers benefit, not just suppliers."The consumer group Which? said the government must commit to keeping the £11bn cost of the programme under control. Richard Lloyd, executive director of Which?, said: "Energy prices are consistently one of the top worries for consumers so the government must commit to keeping the £11bn cost of rolling out smart meters under control. As consumers will ultimately foot the bill for smart meters, the programme must be done at the lowest possible cost and ensuring that consumers benefit, not just suppliers."
Jonathan Isaby, chief executive of the TaxPayers' Alliance, said: "This is the latest in a long line of headline-grabbing initiatives that risk pushing up the cost of energy to hard-pressed consumers. Ultimately, the only way that energy bills can be brought down in the long-term is for the government to do away with green taxes and subsidies, which increase the burden on families struggling with the cost of living."Jonathan Isaby, chief executive of the TaxPayers' Alliance, said: "This is the latest in a long line of headline-grabbing initiatives that risk pushing up the cost of energy to hard-pressed consumers. Ultimately, the only way that energy bills can be brought down in the long-term is for the government to do away with green taxes and subsidies, which increase the burden on families struggling with the cost of living."
Lady Verma, parliamentary undersecretary of state for Energy & Climate Change, said: "Smart meters put power into the hands of consumers, bringing an end to estimated billing and helping people understand their energy use. The nationwide roll-out is part of the government's complete overhaul of the UK's energy infrastructure, which will revolutionise the market and support the development of smarter electricity grids. It will help reduce consumer bills, enable faster, easier switching and give households control at the touch of a button."Lady Verma, parliamentary undersecretary of state for Energy & Climate Change, said: "Smart meters put power into the hands of consumers, bringing an end to estimated billing and helping people understand their energy use. The nationwide roll-out is part of the government's complete overhaul of the UK's energy infrastructure, which will revolutionise the market and support the development of smarter electricity grids. It will help reduce consumer bills, enable faster, easier switching and give households control at the touch of a button."